Penalties and the 50 per cent consumer fine

What is happening

The shop refunded a defective item two months late instead of within ten days and considers the matter closed. The buyer knows that something is due for the delay but not from which date to count it or on what amount.

A contractor missed the deadline for a fitted kitchen, a renovation or new windows and is offering a "goodwill discount". The discount bears no relation to the penalty that has built up in the meantime, and signing an agreement may close off any further claims.

A lawsuit is already under way and the defendant asks the court to cut the penalty as disproportionate. At this point it is not enough to calculate: you have to justify why the amount is warranted.

What the law says

• Penalty rates are set by the Law of the Russian Federation No. 2300-1 of 7 February 1992 "On Consumer Rights Protection" (the Consumer Protection Law) and depend on the breach: 1 per cent of the price per day for delay in dealing with a defect claim (Article 23), 0.5 per cent of the prepayment per day for failing to deliver paid-for goods (Article 23.1), and 3 per cent of the price per day for late work or services (Article 28).
• For works and services the penalty is capped at the price of the work; for goods the law sets no upper limit, but the defendant may ask for a reduction.
• The penalty may be claimed not just for the past but up to the date the obligation is actually performed, which the court states in the judgment if asked to.
• Where the consumer's demands were not met voluntarily, the court orders the seller or provider to pay a fine of 50 per cent of the entire sum awarded, including the penalty and distress damages (Article 13(6) of the Consumer Protection Law).
• Compensation for non-pecuniary damage is awarded once a breach of consumer rights is established (Article 15 of the same Law); the court decides the amount.
• On the defendant's application the court may reduce the penalty and fine under Article 333 of the Civil Code; the defendant must show clear disproportion, and those arguments need a substantive answer.

What we do

• We identify which article applies to your situation, and on what amount and from which date the penalty runs.
• We prepare a detailed calculation period by period, taking account of part-payments and the dates claims were received.
• We draft a claim stating the penalty separately, so that any voluntary refusal to pay it is plain to the court.
• We assess any settlement or "compensation" offer and explain what you gain and what you give up by signing it.
• We prepare the lawsuit, or amend the claim in an existing case, including the running penalty and the fine.
• We draft objections to the application to reduce the penalty and represent you at the hearing.

What we will need from you

• The contract, receipt or other document showing the price of the goods or work.
• Your claims with proof of receipt, postal receipts and delivery notices.
• Records of payments: when and how much was refunded or transferred to you.
• Replies from the seller or provider, and any certificates or agreements you were asked to sign.
• If the case is already in court: the claim, the defence and the court's rulings.